How has Sofidel come to operate in 13 countries, produce over one million tons of tissue paper per annum and employ over 5,300 people? There is definitely a story to be told here. Andrea Piazzolla, Sofidel’s Chief Purchasing Officer, explains that the company’s history can be categorised in four distinct phases:
“In the first phase, from the 60s to the 90s, when Sofidel was learning about the market and technology, we invested in Italy and started cooperating with retailers. The second phase, between the 90s and mid-2000s, was the internationalisation phase, during which Sofidel developed important green fieldinvestments in France, Poland, UK, Spain and Germany. That was followed by the development of our relationships with our retailers in Europe. The third phase, from the mid-2000s up to 2015, was the phase of acquisitions. We took over some companies and brands and that has granted us some important insight.”
"In the market where Sofidel is active, there will be growth." Andrea Piazzolla, Chief Purchasing Officer, Sofidel.
“At the end of the third phase,” Piazzolla continues, “an important milestone characterized our history. We decided to expand to the largest market in the world, North America. After acquiring the Cellynne Tissue Company in 2012, we are now active in seven US states.”
The final phase of Sofidel’s historical makeup is the current one. “From 2015 onwards, we have been characterised by organic growth. We are increasing the production of our existing sites in Europe,” Piazzolla notes. By the end of 2018, Sofidel’s total capacity of tissue paper produced per annum will increase by approximately 200,000 tons.
A family-owned tissue business
Despite their internationalisation and penetration of multinational markets, Sofidel’s modus operandi remains firmly rooted in familial tradition. “We are a family-owned company, 100%” Piazzolla proudly says. Everyday operations bring together the hands-on approach of a family-owned company with the ethos and ambition of a multinational. Internal decision-making and communication with shareholders is swift and without hesitation.
“One of the founders, Mr. Emi Stefani, is in the office every single day. The other founding partner, Giuseppe Lazzareschi, passed away in 1993, and his son Luigi Lazzareschi replaced him as CEO. They are both very active in our daily business. Mr Stefani is now 86, and yet he is in my office every day, asking me about the market situation,” Piazzolla notes. Like most of the top management at Sofidel, Piazzolla has been with the company for decades, joining in 1996.
With an expected growth rate between 1-1.5% per annum, Sofidel has the potential to install new machinery each year.
Though Sofidel has since profited significantly from foreign markets, the Italian economy hasn’t seen much of a turnaround since the recession began in 2009. Fortunately for Sofidel, their ‘industrial pocket’ is not prone to cyclical fluctuations. Nonetheless, only 20% of the company’s total production is based in Italy. With an expected growth rate between 1–1.5% per annum, Sofidel has the potential to install new machinery each year.
“The way to make a profit, and to take advantage of such a growth rate, is through the quality of the products and through product penetration. In that way, we can achieve great performances in the future,” Piazzolla maintains.
Sofidel is committed to creating competitiveness through sustainability in the mid to long-term, and to performing better according to environmental, economic, social and technological standards. Furthermore, Sofidel is able to create value through their investments in tangible assets. That is to say, via physical assets that have a significant ‘useful life’. This undoubtedly grants Sofidel a competitive advantage over its competitors and attracts long-term partners such as Metsä Fibre.
Metsä Fibre - a value-adding partner
Paolo Di Spigna, Managing Director of Metsä Fibre S.r.l. in Italy, is at the crux of the longterm relationship between Sofidel and Metsä Fibre, which began in 1995. The fact that Di Spigna is located in Italy matters greatly to Piazzolla and his colleagues.
“Metsä Fibre is one of the few companies in the pulp market that has subsidiaries based in Italy. The Italian market is very fragmented. Usually things come about in the pulp market first in Italy and then in the rest of Europe,” says Piazzolla. “Many observers understand the theory of the market very well, but we need those who have a feeling for the market. Paolo has such a feeling – he can predict the behaviour of the local market. That has made our relationship with Metsä Fibre even stronger,” affirms Piazzolla.
As part of the ongoing 50th anniversary celebrations, Sofidel is awarding its partners and suppliers with regards to their sustainability efforts. Metsä Fibre are being considered for the Best Supplier and Best Sustainable Product awards. It is evident that while both Metsä Fibre and Sofidel have grown as entities, their respective commitment to sustainability has, to some degree, come to define their relationship.
“With this award, we want to promote the best practices in terms of environmental and social responsibility. We are investing a lot of money in sustainability at Sofidel, and we want to challenge our stakeholders to do so as well. We want to engage our suppliers with sustainability, since we cannot grow sustainably without their help,” Piazzolla says.
INVESTMENTS IN sustainability
As opposed to many of its competitors’ strategy of acquiring existing plants, Sofidel is looking to invest in green field technologies. This means that when acquiring, for example, an industrial space, the company’s ambitions aren’t constrained by any limitations that might be imposed by such a space. These investments and acquisitions ensure that the latest in sustainable technology, along with state-of-the-art standards in all production-related aspects, can be installed and maintained. Piazzolla notes that Sofidel understands sustainability is a “strategic development factor, through which we can contribute to the quality of life of all our stakeholders and consumers.”
You get the sense that sustainability is not just a linear project for Sofidel, but rather a procedural action plan, one that will succumb to change and variation as it is implemented in tandem with today’s economy. In addition to the social and environmental benefits, there are financial perks involved in sustainable actions.
“As a WWF Climate Saver, our target is to reduce our direct C02 emissions by 23%, and our indirect C02 emissions by 13%, by 2020. We are driven by a ‘less is more’ approach. We believe saving natural resources and lowering the consumption of natural capital will improve our performance and allow us to grow in a responsible way. Also, if we are able to reach these emission reductions, we will be eligible for tax concessions. As such, we will have higher market (entrance) standards, with regards to sustainability, which will make it more difficult for companies to use other competitive methods to enter the market,” Piazzolla states.
As in any business, there are no certainties in the tissue market, and it’s not always smooth sailing. Of course there are market projections, as well as the kinds of local market predictions which Di Spigna is highly versed in. But that is as far as it goes. A certain uncertainty will always remain, as in any market.
"We want to engage our suppliers with sustaibanility, since we cannot grow sustainably without their help."
“In the mature market, where Sofidel is active, there will be growth. Also, many new projects and capacities will be introduced to the market. In the Eastern European market, where the product is a commodity categorised by price rather than quality, new capacities will offset growth completely, creating a general over-capacityin the region,” Piazzolla acknowledges. “That will be a challenge. In the meantime, Sofidel has to continue to invest,” he concludes. But for now, Sofidel is entitled to some grand anniversary celebrations.